Mistakes To Avoid With A Child's Allowance

October 4, 2019

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Around two-thirds of parents give their children an allowance averaging about $30 a week. Most parents believe that an allowance should, at least in part, be earned with the average chore work of 5.3 hours a week earning a tidy $6.11 an hour. More than half of parents give an allowance to teach their kids that money needs to be earned. But as much as we try to teach good financial habits with an allowance, there are some mistakes made too.  Parents tend to get hung up on how much they pay their kids, but the amount matters less than that you are using an allowance as a chance to talk about money and how to manage it. A good rule of thumb is to offer one dollar a week of your child's life. So a five-year-old would get $5 per week while a 16-year-old would get $16 per week. Get them used to handling and talking about money so it’s not so much the amount as the conversation around it and how they can save or spend it. Roughly half of parents still aren’t giving their kids an allowance by age 8, which experts say is too late.  Rather an allowance should begin as soon as they grasp the concept of money or can count it, which is around five-years-old or when they start kindergarten. This way, money, and an appreciation for things like saving it and what it is used for, become a part of their lives very early on. While nearly two in three men say they got an allowance growing up, only about half of women say the same, according to a recent survey. Experts agree this is a big mistake and unfair. And while most parents associate allowance with chores, some experts say that’s not always the best approach. The idea is that kids should do chores and take on household responsibilities because they are part of the family, and being part of the family means contributing.  They are not being paid to contribute — it is expected as part of their family role. Instead pay for chores outside of the regular weekly or daily chores that kids must do. For example, taking out the garbage is contributing to the family but raking up leaves in the front yard is worthy of being paid for work.

SOURCE: Market Watch

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